DARA BioSciences to Raise $2.8 Million Pursuant to Securities Purchase Agreement

Funds Earmarked for Soltamox Commercial Activities, Gelclair Launch and Working Capital

RALEIGH, N.C.--()--DARA BioSciences, Inc. (Nasdaq:DARA) (the "Company" or "DARA") announced that it entered into a definitive securities purchase agreement with certain investors providing for the issuance of $2,800,000 of shares of Series B-3 and Series B-4 convertible preferred stock (convertible into a combined total of 3,684,210 shares of common stock), two and one half year warrants to purchase up to 1,842,105 shares of common stock at an exercise price of $1.05 and five and one half year warrants to purchase up to 1,842,105 shares of common stock at an exercise price of $1.05. None of the warrants are exercisable for six months from the initial issuance date. The Series B-3 and Series B-4 convertible preferred stock is convertible at any time into shares of common stock at an initial conversion price of $0.76 per share.

David J. Drutz, M.D., Chief Executive Officer, commented, "We are pleased to have consummated this financing, which will provide additional capital for the commercial activities related to Soltamox®, our FDA-approved treatment for breast cancer, and for Gelclair, our FDA-cleared product for the treatment of oral mucositis, which we expect to launch in the first quarter of 2013. Funds will also be used for general corporate purposes. We expect that with this additional funding we will have enough cash to effectively execute our commercial plan and believe that this raise will alleviate our needs for additional financing in 2013."

Ladenburg Thalmann & Co., Inc., a subsidiary of Ladenburg Thalmann Financial Services Inc. (NYSE AMEX:LTS), acted as the exclusive placement agent for this transaction.

The closing of the sale of the securities is expected to take place on or about December 31, 2012, subject to satisfaction of customary closing conditions.

The shares of Series B-3 preferred stock described above were offered pursuant to a shelf registration statement (File No. 333-173098), which was declared effective by the United States Securities and Exchange Commission ("SEC") on April 19, 2011. The shares of Series B-4 preferred stock and warrants described above have not been registered under the Securities Act of 1933 (the “Act”), and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements. The Company has agreed to file one or more registration statements with the SEC covering the resale of the shares of common stock issuable upon conversion of or in connection with the Series B-4 preferred stock and upon exercise of the warrants. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. When filed with the SEC, copies of the prospectus supplement and the accompanying base prospectus relating to this offering may be obtained at the SEC's website at http://www.sec.gov or by request at Ladenburg Thalmann & Co., Inc, 4400 Biscayne Blvd., 14th Floor, Miami, Florida 33137.

About DARA BioSciences, Inc.

DARA is a specialty pharmaceutical company focused on the development and commercialization of oncology treatment and supportive care products. DARA has comprehensive commercial coverage across the national oncology market through a series of agreements with a number of specialty pharmacy providers, leading group purchasing organizations (GPOs), retail partners, reimbursement experts, and an industry-leading third-party logistics provider. As part of an integrated national network with annual sales of over $1 billion in cancer therapeutics, DARA has significant commercial scale and capabilities. Its distribution network consists of more than 45,000 retail pharmacies, mail order pharmacies, and long-term care facilities. This provides DARA with established reimbursement and logistics expertise, as well as partnering opportunities with more than 300 sales and marketing personnel uniquely focused on oncology and oncology support products. This comprehensive network of partners is rare if not unique among companies in the oncology supportive care area and provides DARA a strong foundation for product introductions into this underserved market.

DARA increased its focus in oncology through its January 2012 acquisition of Oncogenerix, Inc., which holds the exclusive U.S. marketing rights to Soltamox®, a novel oral liquid formulation of tamoxifen citrate, which is widely used in the treatment and prevention of breast cancer. Soltamox is the only FDA-approved oral liquid version of tamoxifen citrate and fulfills a vital clinical need for patients who cannot tolerate existing solid tablet formulations of this drug. DARA launched Soltamox in October 2012 to coincide with National Breast Cancer Awareness Month. DARA has exclusive U.S. rights to Soltamox through a license from Rosemont Pharmaceuticals, Ltd. Additionally, in June 2012, DARA launched its first product, Bionect®, a topical treatment for skin irritation and burns associated with radiation therapy. DARA has rights to market Bionect in the US oncology/radiology markets under license from Innocutis. In September 2012, DARA entered into an exclusive agreement with the Helsinn Group of Switzerland for U.S. commercial rights to Gelclair®, an FDA-cleared product for the treatment of oral mucositis. DARA plans to launch Gelclair in the first quarter of 2013.

Prior to acquiring Oncogenerix, DARA was focused on the development of a cancer-support therapeutic compound, KRN5500, for the treatment of neuropathic pain in patients with cancer. This product is an excellent fit with DARA’s strategic oncology focus, has successfully completed a Phase 2a clinical trial, and has been designated a Fast Track Drug by the FDA. DARA is working with the National Cancer Institute (NCI) to design an additional clinical trial under joint DARA-NCI auspices while continuing further Phase 2 development. DARA has submitted an Orphan Drug Application to the FDA for KRN5500.

In addition to its oncology products, DARA’s pipeline includes DB959, a novel, non-TZD dual delta/gamma PPAR agonist for the treatment of type 2 diabetes and dyslipidemia. DARA has completed Phase 1 testing of DB959 and is presently pursuing opportunities to out-license this product.

For more information please visit our web site at www.darabio.com.

Safe Harbor Statement

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are subject to factors that could cause actual results to differ materially for DARA from those projected. Those factors include risks and uncertainties relating to DARA's ability to timely commercialize and generate revenues or profits from Bionect®, Soltamox®, Gelclair® or other products given that DARA only recently hired its initial sales force and DARA's lack of history as a revenue-generating company, FDA and other regulatory risks relating to DARA's ability to market Bionect®, Soltamox®, Gelclair® or other products in the U.S. or elsewhere, DARA's ability to develop and bring new products to market as anticipated, DARA's current cash position and its need to raise additional capital in order to be able to continue to fund its operations, the current regulatory environment in which DARA develops and sells its products, the market acceptance of those products, dependence on partners, successful performance under collaborative and other commercial agreements, competition, the strength of DARA's intellectual property and the intellectual property of others, the potential delisting of DARA's common stock from the NASDAQ Capital Market, risks and uncertainties relating to DARA's ability to successfully integrate Oncogenerix and other risk factors identified in the documents DARA has filed, or will file, with the Securities and Exchange Commission ("SEC"). Copies of DARA's filings with the SEC may be obtained from the SEC Internet site at http://www.sec.gov. DARA expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in DARA's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based. DARA BioSciences and the DARA logo are trademarks of DARA BioSciences, Inc.

Contacts

Contact for DARA BioSciences, Inc.:
The Del Mar Consulting Group, Inc.
Robert B. Prag, 858-794-9500
President
bprag@delmarconsulting.com
or
Alex Partners, LLC
Scott Wilfong, 425-242-0891
President
scott@alexpartnersllc.com

Release Summary

DARA BioSciences to raise $2.8 Million pursuant to Securities Purchase Agreement. Funds are earmarked for Soltamox commercial activities, Gelclair launch and working capital.

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Contacts

Contact for DARA BioSciences, Inc.:
The Del Mar Consulting Group, Inc.
Robert B. Prag, 858-794-9500
President
bprag@delmarconsulting.com
or
Alex Partners, LLC
Scott Wilfong, 425-242-0891
President
scott@alexpartnersllc.com